Command Economies

Government-Controlled, Centrally Planned

The Flag of North Korea

North Korea is one of the most well known examples of a command economy. Cuba, Loas, and Soviet Russia are/were also command economies. In these economies, the government controls all aspects of life. Businesses, goods, services, and wages are all distributed according to the government.

Propoganda of Kim Il-sung

- the potential for efficient decisions without a democratic process
- the ability to place the whole group's well-being over individuals
- can move resources quickly in times of war or emergencies
- aim to provide for everyone, even the sick and old
- can produce helpful things like medicine that may have not been made in a market economy

- central planners have few qualifications to plan a country
- workers do not have a motivation to work if they are paid the same
- widespread poverty, wealth accumulated at the top
- no individuality, people live in fear
- often face shortages

The 3 Questions of Economics

What is to be produced?
This is addressed by command economies according to what the country needs. Frequently command economies will focus on military power. The decision of what to produce and how resources will be allocated falls to the hands of the government and central planners.

How are the goods produced?
Again, this is controlled by central planners who decide how resources are used. There is no private property so all businesses and factories are on government-owned land.

For whom are the goods produced?
A centrally planned economy has the potential to provide for everyone, even those that cannot support themselves, but in most cases the goods are produced for the individuals that benefit the country, and much of the wealth falls to the people high up in the government.

The Soviet Union was a centrally-planned socialist economy that was also heavily laden with propaganda and ruled harshly by a dictator.


Comment Stream

3 years ago

Very well-organized information and a good example used. (Interesting video)

3 years ago

Well organized and great visuals and video that connects your ideas.